(Adds details on mutual fund and ETF flows, analyst and
investor quote, table, byline)
By Trevor Hunnicutt
NEW YORK, May 11 (Reuters) - Investors stampeded into
U.S.-based stock funds that invest in Europe, plowing the
second-largest amount on record into those products and the most
in two years, Lipper data showed on Thursday.
European stock funds in the United States collected $1.7
billion in the week ended Wednesday, the data showed, following
the victory on Sunday of European centrist Emmanuel Macron over
eurosceptic Marine Le Pen in the French presidential runoff.
The cash flows into the Europe funds are the biggest since
the category's largest week ever in February 2015, when fears of
a Greek exit from the European Union were ebbing and markets
gorged on monetary policy stimulus, according to the research
service's records that date back to 1992.
"There was a sigh of relief," said Tom Roseen, head of
research services at Thomson Reuters Lipper, despite the fact
that the result was widely predicted.
"There are buying opportunities in Europe."
DoubleLine Capital LP chief Jeffrey Gundlach on Wednesday
told Reuters that volatility in stock markets is "insanely low"
and that European and emerging markets equities are more
attractive than U.S. equities.
The pan-European STOXX 600 index has returned 11
percent since the end of 2016, while the S&P 500 has
added 7.7 percent in that period. The figures include dividends.
Flow figures for U.S.-based domestic stock funds
corroborated the shift to overseas equities. Investors
pulled$4.6 billion from funds focused on domestic shares, and
added$2.5 billion in cash to equity funds primarily invested
abroad.
The largest inflows went to iShares MSCI EAFE ETF,
which invests in developed markets outside the United States,
and pulled in an estimated $1.1 billion. The iShares MSCI
Eurozone ETF gathered $933 million.
But investors yanked $2.5 billion from SPDR S&P 500 ETF
and $1.2 billion from iShares Russell 2000 ETF.
Both invest broadly in U.S. stocks.
U.S.-based taxable bond funds reeled in $2.2 billion in
their eighth straight week of inflows, but riskier high-yield
bond funds posted $1.7 billion in withdrawals, the largest
weekly outflow figure in about two months.
Emerging market stock funds in the United States posted
their first weekly outflow of the year, with $305 million in
withdrawals. Technology sector stock funds attracted $557
million in their second biggest week of inflows in 2017.
The iPath S&P 500 VIX Short-Term Futures ETN,
designed to reflect traders' projections of stock market
volatility, attracted its biggest cash inflow since late October
2016, Lipper data showed. The CBOE Volatility Index, a
measure of implied volatility known as the "fear gauge" for U.S.
stocks, fell earlier this week to its lowest close since 1993.
The following is a broad breakdown of the flows for the
week, including mutual funds and exchange-traded funds:
Sector Flow Chg % Assets Assets Count
($blns) ($blns)
All Equity Funds -2.108 -0.04 5,876.527 11,482
Domestic Equities -4.579 -0.11 4,136.680 8,227
Non-Domestic Equities 2.470 0.14 1,739.848 3,255
All Taxable Bond Funds 2.178 0.09 2,389.090 5,795
All Money Market Funds 1.181 0.05 2,255.508 1,011
All Municipal Bond Funds 0.606 0.16 377.678 1,391
(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and
Diane Craft)